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US NFTs are not currently specifically regulated in the US. Thus, the legal status and regulatory classification of NFTs under US law remains unclear. However, as with other cryptoassets, the features of an NFT and how it is marketed and purchased or sold could cause an NFT to fall under existing US federal regulatory frameworks. The following key points should be considered: • From a US securities law perspective, pieces of memorabilia and collectibles are not ordinarily considered to be a "security" standing alone. However, an NFT marketed as a financial investment whose holders have been led to expect profits from an entrepreneurial venture involving the NFT, or the managerial skills of the NFT's promoter, is more likely to be deemed to be part of an "investment contract", which is a type of "security" that is subject to US securities law. While no US federal regulator has taken enforcement action against an NFT issuer to date, we have seen private litigants filing civil class actions against NFT issuers alleging that the issuance of their NFTs constituted an unregistered securities offering under US law. Class action suits can be expensive to defend even where claimants are ultimately unsuccessful. • The Financial Crimes Enforcement Network (FinCEN) and the courts have yet to issue specific guidance on NFTs. From a US anti-money laundering standpoint, whether an NFT can be characterised as a "medium of exchange" and ultimately as a "convertible virtual currency" under US law is not entirely clear at present. NFTs that are truly non-fungible should not be considered a medium of exchange or convertible virtual currency because, unlike Bitcoin or other virtual currencies, most NFTs are not designed or intended to serve as a currency substitute or medium of exchange. However, the situation could change – for example, if certain NFTs are actively traded and come to have an established value at which they can readily be converted to currency. In the case of intermediaries who facilitate NFT trading but also engage in other activities that are subject to established regulation, this argument may have less force. Recent changes to the Bank Secrecy Act included in the Anti-Money Laundering Act of 2020 (the 2020 Act) amend certain definitions to include businesses engaged in the exchange or transmission of "currency, funds, or value that substitutes for currency" as financial institutions that are subject to AML regulatory requirements. • US federal regulators could also interpret anti-money laundering regulations governing dealings in "antiquities" or "art" to cover NFTs. The 2020 Act amended the Bank Secrecy Act's definition of "financial institution" to include persons engaged in the trade of antiquities, and directs FinCEN to promulgate implementing regulations. The 2020 Act also instructs the Treasury and other agencies to perform a study of the facilitation of money laundering in the trade of works of art, and report to Congress in January 2022 to inform the debate over whether to extend AML regulatory requirements to art dealers. The impact such actions will ultimately have on NFTs, if any, is not known at present. • US federal sanctions laws may also be relevant to the issuance, purchase, and sale of NFTs. NFT transactions can occur between counterparties located anywhere in the world. Thus, US and certain non-US persons transacting in NFTs, and NFT dealers in particular, should ensure compliance with regulations issued by the US Office of Foreign Assets Control prohibiting business dealings with certain persons, as NFTs of any value could be used to evade US sanctions. Clifford Chance is unique in having a truly global sports industry group advising clients on novel legal issues such as these. Please contact a member of the group in your jurisdiction for more details of our experience. https://www.cliffordchance.com/sports NON-FUNGIBLE TOKENS: THE GLOBAL LEGAL IMPACT CLIFFORD CHANCE 13PDF Image | NON-FUNGIBLE TOKENS GLOBAL LEGAL IMPACT
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NFT (Non Fungible Token): Buy our tech, design, development or system NFT and become part of our tech NFT network... More Info
IT XR Project Redstone NFT Available for Sale: NFT for high tech turbine design with one part 3D printed counter-rotating energy turbine. Be part of the future with this NFT. Can be bought and sold but only one design NFT exists. Royalties go to the developer (Infinity) to keep enhancing design and applications... More Info
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